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Fair Value of Financial Instruments (Tables)
12 Months Ended
Jan. 02, 2016
Fair Value of Financial Instruments  
Financial assets and liabilities measured at fair value on a recurring basis

 

        The following summarizes the valuation of the Company's financial instruments (in thousands).

 
  Fair Value Measurements
at January 2, 2016 Using
   
 
Description
  Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
  Total  

Assets:

                         

Cash Equivalents:

                         

Money market funds

  $ 37,721   $   $   $ 37,721  

Commercial paper

        11,272         11,272  

Certificates of deposit

        2,845         2,845  

U.S. government agency

        1,599         1,599  

Municipal bonds

        1,577         1,577  

Total cash equivalents

  $ 37,721   $ 17,293   $   $ 55,014  

Short-term Investments:

   
 
   
 
   
 
   
 
 

Municipal bonds

  $   $ 93,516   $   $ 93,516  

Commercial paper

        11,176         11,176  

Variable-rate demand notes

        8,995         8,995  

Certificates of deposit

        8,000         8,000  

U.S. government agency

        3,998         3,998  

International government bonds

        2,220         2,220  

Corporate bonds

        996         996  

Total short-term investments

  $   $ 128,901   $   $ 128,901  

Long-term Investments:

   
 
   
 
   
 
   
 
 

Auction rate securities

  $   $   $ 7,126   $ 7,126  

Total long-term investments

  $   $   $ 7,126   $ 7,126  

Other assets, net:

   
 
   
 
   
 
   
 
 

Derivative instruments

  $   $ 92   $   $ 92  

Total

  $   $ 92   $   $ 92  

Total

 
$

37,721
 
$

146,286
 
$

7,126
 
$

191,133
 

Liabilities:

                         

Accrued expenses:

                         

Contingent consideration

  $   $   $ 4,749   $ 4,749  

Other non-current liabilities:

   
 
   
 
   
 
   
 
 

Contingent consideration

  $   $   $ 9,324   $ 9,324  

Total

  $   $   $ 14,073   $ 14,073  


 

 
  Fair Value Measurements
at January 3, 2015 Using
   
 
Description
  Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
  Total  

Assets:

                         

Cash Equivalents:

                         

Money market funds

  $ 71,415   $   $   $ 71,415  

Certificates of deposit

        7,739         7,739  

Commercial paper

        5,348         5,348  

Municipal bonds

        1,757         1,757  

U.S. government agency

        1,202         1,202  

Corporate bonds

        1,101         1,101  

U.S. government bonds

    1,000             1,000  

Total cash equivalents

  $ 72,415   $ 17,147   $   $ 89,562  

Short-term Investments:

   
 
   
 
   
 
   
 
 

Municipal bonds

  $   $ 129,152   $   $ 129,152  

Corporate bonds

        33,033         33,033  

Variable-rate demand notes

        12,915         12,915  

Commercial paper

        8,995         8,995  

Asset-backed securities

        5,377         5,377  

International government bonds

        2,516         2,516  

U.S. government bond

    650             650  

U.S. government agency

        601         601  

Certificates of deposit

        250         250  

Total short-term investments

  $ 650   $ 192,839   $   $ 193,489  

Long-term Investments:

   
 
   
 
   
 
   
 
 

Auction rate securities

  $   $   $ 7,419   $ 7,419  

Total long-term investments

  $   $   $ 7,419   $ 7,419  

Other assets, net:

   
 
   
 
   
 
   
 
 

Derivative instruments

  $   $ 331   $   $ 331  

Total

  $   $ 331   $   $ 331  

Total

 
$

73,065
 
$

210,317
 
$

7,419
 
$

290,801
 

Liabilities:

                         

Accrued expenses:

                         

Contingent consideration

  $   $   $ 4,288   $ 4,288  

Other non-current liabilities:

   
 
   
 
   
 
   
 
 

Contingent consideration

  $   $   $ 14,150   $ 14,150  

Total

  $   $   $ 18,438   $ 18,438  
Summary of quantitative information about level 3 asset fair value measurements

 

 

Fair Value at
January 2, 2016
(000s)
  Valuation Technique   Unobservable Input   Weighted
Average
$7,126   Discounted cash flow   Estimated yield   1.06%

 

 

 

 

Expected holding period

 

10 years

 

 

 

 

Estimated discount rate

 

3.69%
Summary of quantitative information about level 3 liability fair value measurements

 

 

Fair Value at
January 2, 2016
(000s)
  Valuation Technique   Unobservable Input   Range
$14,073   Monte Carlo simulation   Expected revenue growth rate   29.8% - 55.8%

 

 

 

 

Expected revenue volatility

 

20.0%

 

 

 

 

Expected term

 

0.0 years - 3.0 years

 

 

 

 

Estimated discount rate

 

0.34% - 0.98%
Summary of activity in Level 3 financial instruments

 

        The following summarizes the activity in Level 3 financial instruments for the years ended January 2, 2016 and January 3, 2015 (in thousands):

Assets

 
  Year Ended  
Auction Rate Securities
  January 2,
2016
  January 3,
2015
 

Beginning balance

  $ 7,419   $ 10,632  

Settlements

        (4,425 )

Gain (loss) included in other comprehensive income (loss)

    (293 )   1,212  

Ending balance

  $ 7,126   $ 7,419  

Liabilities

 
  Year Ended  
Contingent Consideration (1)
  January 2,
2016
  January 3,
2015
 

Beginning balance

  $ 18,438   $ 12,919  

Settlements

    (4,464 )    

Loss recognized in earnings (2)

    99     5,519  

Ending balance

  $ 14,073   $ 18,438  

Net loss for the period included in earnings attributable to contingent consideration held at the end of the period:

  $ (99 ) $ (5,519 )

(1)
In connection with the acquisition of Energy Micro, the Company recorded contingent consideration based upon the expected achievement of certain milestone goals. Changes to the fair value of contingent consideration due to changes in assumptions used in preparing the valuation model are recorded in selling, general and administrative expenses in the Consolidated Statement of Income.

(2)
Changes to the estimated fair value of contingent consideration were primarily due to revisions to the Company's expectations of earn-out achievement.